2.1
Creating Blueprints for Business in the 21st
Century: Social
Entrepreneurship Shows the Way

Summary:

In the chapter entitled “Creating Blueprints for Business in the 21st
Century: Social Entrepreneurship Shows the Way,” author Pamela Hartigan
describes projects headquartered in six countries (Singapore, India,
France, Mexico, the United States, and the United Kingdom), but having
an impact far beyond those borders. In contrast to “charitable” work,
with which it is often confused, she defines social entrepreneurship as
the “resourceful, pragmatic, innovative, and visionary” creation of a
new or improved product or service, not with the expectation of sale or
profit generation for entrepreneur or investors, but, rather, to
address market and/or government failures, to deliver goods and
services needed to address social, economic, or environmental
challenges which governments are generally unable or unwilling to
tackle. Distinguishing social entrepreneurs from other actors in the
citizen sector, Hartigan proceeds to discuss the “distinctive domain”
and driver of social entrepreneurship, neglected positive
externalities. The remainder of the paper outlines significant
projects—both profit-making and non-profit—which harness positive
externalities through new organizational forms and ways of operating,
creating organizations that are innovative, philosophically positive,
and morally compelling. She shows how each venture responds to an
opportunity and uses a business model which challenges the traditional
legal frameworks that dichotomize “do-good” from money-making
organizations. To cite only three of her fascinating examples: the
World Toilet Organization is a global service-platform network
providing solutions to sanitation challenges around the world, focusing
on toilets instead of water, providing governments with solutions that
promote sanitation and public health policies, and in which all toilet
and sanitation organizations can learn from one another and leverage
media and global support. Two avid motorcyclists created Riders for
Health, a program for maintenance and management of neglected
motorcycles and other vehicles in remote, hard-to-access African
communities, such as the vehicle fleets used by Ministries of Health
and NGOs in the delivery of essential healthcare services and
preventative health education to rural populations. The Aravind Eye
Care Hospital, modeled on McDonald’s, gives sight to the blind and
visually impaired. They perform up to 1,000 sight-restoring surgeries
daily—at a fraction of the cost of similar procedures in other
countries—provide eye-screening camps in remote areas, and train
medical personnel around the globe.

Summary:

Three authors have collaborated on the chapter entitled “Organizations Don’t Innovate, People Do: Trust Is the Foundation,”
based on a lively, hands-on workshop given for business personnel, and
focused on the motivations and culture of innovators and their
interactions with others. Their jumpingoff point is the humorous story
of how “Boss” Charles Kettering, founder of General Motors, succeeded
in reducing the time to paint a new car from 17 hours to one, over the
obstinate and disbelieving objections of all those involved in the
process. They then walk the reader through a series of exercises
designed to elicit greater understanding of the “people side” of
innovation, how individuals behave and interact with others, and how
leaders and managers can develop new ways of responding to the human
challenges of innovation. Innovation is intriguingly described as a
“continuum,” defined as any change, whether revolutionary,
expansionary, or evolutionary, that leads to a quantifiable gain in a
process. In order to transform the understanding of such ideas into
action within an organization, trust is the foundational principle that
makes such innovation happen. Whether among three or 30,000, it is
trust that encourages imagination, allows for risk, spurs the passion
for solving difficult problems, and profoundly affects productivity,
quality, turnover, absenteeism, motivation and, ultimately, the
generation of the quantifiable gains sought by innovating. Challenging
readers to consider the real people they have trusted—or not—in their
past experience, the authors discuss the culture of trust that allows
people to care about their organization, jobs, co-workers, and
customers, and to be more creative and innovative by reducing or
eliminating the fear of individual failure. Digging deeper, they
illustrate the processes of communication and “filtering” systems that
enable people to either be open to understanding and change, or close
off and “protect.” Finally, distinguishing between “head” and “heart”
trust, they provide a tool for readers to calibrate the degrees and
quality of trust which they have in others, whether in the workplace,
in the family, or among friends, as a way forward in establishing
“creativity partnerships” that can lead to successful innovation.globe.

2.3 Breakthrough Inventions and the Growth of Innovation Clusters

Summary:

In his chapter entitled “Breakthrough Inventions and the Growth of Innovation Clusters,”
author William Kerr questions the prevalent theory that cities and
industries tend to follow the geographic locations of breakthrough
innovations. Kerr contends that the model, according to which centers
of innovation are dictated by where frontier inventions occur, and that
the industry migrates to be close to these new innovations, does,
indeed, fit the distribution of cities and industries well in several
countries. However, he suggests, one might just as easily argue that
new technologies are simply transported to the existing cluster. His
paper describes research to investigate whether breakthrough inventions
do, in fact, draw subsequent research efforts for a technology to a
local area and outlines the empirical work done to verify these spatial
movements, the speed at which reallocations occur, and their economic
consequences. After first classifying breakthrough inventions—such as
resins, surgical instruments, and optics—he then models the relative
number of breakthrough inventions that occurred in various locations. A
given city’s share of breakthrough patents for a specific technology is
divided by the city’s overall share of patents for the technology, and
compared to their general degree of activity in the technology field.
High values indicate that a city was disproportionately the center of
new breakthrough innovations for a technology. Kerr then looked at
whether the places with relatively high shares of breakthrough
inventions outperformed their closest peers. A surprising outcome of
his findings was that immigrants play a disproportionate role in the
question of geographic reallocation. The workforce of immigrants—who
represent 24 and 47 percent of US scientists and engineers with B.A.
and Ph.D. degrees, respectively—are not only more geographically
mobile, but are more flexible in deciding their initial location upon
immigration to the US, thus influencing the geography of innovation.
Kerr’s research provides qualitative support for theoretical models by
which centers of breakthrough innovation do experience subsequent
growth in innovation relative to their peer locations, and for the
strategic importance of the mobility of a given industry’s labor force
in speeding up reallocation.

2.4 The Learning Economy as a Phase in Economic Development:
Contradictions and Institutional Responses

Summary:

Writing about “The Learning Economy as a Phase in Economic Development: Contradictions and Institutional Responses,”
Björn Johnson offers the view that the current “essentialist”
economics—in which processes are often not situated in real time and do
not consider the diversity of specific market economies—is
methodologically inadequate for understanding the specifics of the
contemporary learning economy. Basing his description on the concept of
dialectics, he examines some of the drivers of and contradictions in
the changing dynamics of capitalist systems, such as the interrelations
between technology and institutions, and concludes that without taking
technical, organizational and institutional innovation into
consideration in the analysis, it is not possible to understand
economic development. Johnson contends that the learning economy
develops not only by means of continuous and rapid technological
change, but also through institutional reactions to its own
contradictions, such as the way knowledge does not always translate
into usable commodities; how new knowledge may be incompatible with old
knowledge in a society; how knowledge diversification can lead to
fragmentation and close down some learning possibilities; short-term
vs. long-term decisionmaking; or the tension between indigenous and
foreign knowledge in developing countries. Beyond these general
categories, the author analyzes more closely the way firms typically
innovate, using either the DUI (doing, using, and interacting) mode or
the STI (science, technology, and innovation) mode or a combination of
both. But the inherent myopia which results from habits of thought also
opens up new perspectives when different bodies of knowledge collide
and feed on each other. Although mixing different types of knowledge is
not always easy, whether unintentional or encouraged by organizational
change in support of mixed strategies, the learning economy demands
that the contradictions and tensions be consciously tackled so that new
perspectives and options be opened up and the innovation process
supported.

2.5 Innovation: Thoughts on Purpose, Definition, and Governance

Summary:

In his insightful article “Innovation: Thoughts on Purpose, Definition, and Governance,”
author Mahmud Samandari first summarizes the way in which innovation
has revolutionized how the majority of human beings live, learn, obtain
information, obtain goods and services, relate to and participate in
government and politics, view and handle money, etc. He goes on to
describe the profound changes over time in the paradigm of innovation,
with less emphasis on regulation and insistence on copyright and
intellectual property, the vanishing of national borders as the vast
majority of innovation is conducted outside of the country headquarters
of its investors, and as crowdsourcing and networking have become
virtually ubiquitous tools of the trade. As a result, innovation has
become “collaborative” as never before in history, with firms and
individuals working more cooperatively across previously impermeable
barriers. He then explores some of the myriad purposes which innovation
has served and the surprising ways in which it has come about, from
economic gain and return on investment, increasing human comfort or
crop yield, military superiority and national prestige, to the drive
for individual fame and notoriety, and even sheer accident, as was the
case of gun-powder and the telephone. Some of the unintended and
unforeseen consequences of innovation are also discussed, such as the
phenomenon of suburban sprawl resulting from the emphasis on the
automobile, and worrisome social isolation as a result of the advances
in television and ICT. In the concluding discussion, the author shares
his conviction that what is now needed is a “values-based” approach to
innovation, whereby shared values become the foundation for making
conscious decisions which “align with the future we want to
experience.” Using the analogy of the acorn which is “pulled” to its
ultimate destiny of becoming an oak tree, so human beings can decide to
use innovation to extend human productivity, raise standards of health
and well-being, sharpen and refine the potential of the human brain and
“stimulate the intellectual, moral, and spiritual life” of the whole
human family. Such a conscious, ethical, multidisciplinary approach to
innovation, rather than being perceived as restricting, may be seen as
revealing our human potential for organic, goal-oriented, sustainable
growth, aimed at identifying and working toward the common good.

2.6 There Is No Planet B!

Summary:

In his evocative essay “There is no Planet B!”
José María Figueres tells us how the first international climate change
agreement, known as the Kyoto Protocol, was hammered out, calling upon
37 industrialized nations to reduce their carbon emissions by 5.2
percent from their 1990 level. Although 114 countries have signed the
Protocol, the largest emitters (the U.S. and China) have not, and
little progress was made, with the exception of a few countries which
turned proactive environmental policies into good business
opportunities. The business-as-usual attitude to climate change chosen
by the international community meant that valuable time was lost.
Figueres cites five reasons why this trend must be reversed: 1) climate
change is real and, given leadership and action, it is possible to
mitigate carbon emissions and begin to reverse serious damage; 2) the
scientific community largely agrees on the reality and impact of
climate change and has determined the dangers of adding 2.5 ppm of
atmospheric carbon yearly; 3) people are now willing to make changes to
safeguard future generations; 4) encouraged by knowledgeable NGOs,
governments can now establish regulatory frameworks and put a price on
carbon; 5) finally, with entrepreneurship, management skills, and the
ability to muster capital and resources behind new and innovative
models, business can make or break the fight against climate change. He
describes the next summit, held in Copenhagen following the November
2008 financial meltdown, as a dismal failure, with no expected outcomes
materializing. Three factors transformed his disillusionment into hope:
first, the growing realization that there is no “Planet B” and that
although the Copenhagen Accord was achieved by only five countries, it
left the door open for other nations to adopt; second, the science of
climate change is finally accepted; third, the promising signs that
major businesses are now in the forefront of change, understand the
opportunities provided by the environment to bolster their bottom line,
strengthen brand value, consolidate customer loyalty, and increase
market share. In the world after Copenhagen, countries will not wait
for others to transform “green” into a new competitive advantage.
Instead of all-inclusive solutions, the approaching Cancun conference
will allow separate agreements to be reached, laying the foundation for
further agreements down the road.

2.7 Technological Capability, Innovation, and Productivity in Least Developed
and Developing Countries

Summary:

In her chapter entitled “Technological Capability, Innovation and Productivity in Least-Developed and Developing Countries,”
author Hulya Ulku investigates the rankings of least-developed
countries (LDCs) and developing countries on the key indicators of
technological capability, innovation and productivity. She analyzes the
associations between technological capability/knowledge spillover and
innovation/productivity in the two groups of countries. She shows that,
while LDCs closely follow developing countries in some of the basic
human capital capacity indicators and passive knowledge spillover
channels, they lag far behind in physical and digital infrastructure,
direct knowledge spillover channels, innovation, and labor
productivity. In terms of the association of the four pillars of
technological capability (physical and digital infrastructure, human
capital capacity, and institutional environment) and knowledge
spillover with innovation and productivity, she demonstrates that human
capital capacity has the strongest association with both innovation and
productivity in LDCs. As regards the developing countries, she provides
evidence that the associations of both the technological capability and
knowledge spillover channels with innovation and productivity is much
stronger in these countries as compared to LDCs, although they also
have a weak association between knowledge spillover, innovation, and
productivity. An important finding concerns the fact that innovation is
strongly associated with productivity in developing countries, whereas
this association is not significant in LDCs. In addition, it seems that
the scientific knowledge base in LDCs and lower-middle-income
developing countries is geared more toward agriculture, while in
upper-middle-income countries it is geared toward the manufacturing
sector. Based on her findings, Ulku concludes that LDCs need to
prioritize the promotion of physical and digital infrastructure and
strengthen their human capital capacity, while developing countries
need to focus on the promotion of absorptive capacity to take better
advantage of knowledge spillovers. She points out the crucial role of
government in both the development of national science and technology
policies and promotion of technological innovation in industries with a
strong local knowledge base and linkages with the rest of the economy.